SSR Mining Reports Fourth Quarter and Year-End 2018 Results
News Release 19-03
February 21, 2019
SSR MINING REPORTS FOURTH QUARTER AND YEAR-END 2018 RESULTS
VANCOUVER, B.C. - SSR Mining Inc. (NASDAQ: SSRM) (TSX: SSRM) (“SSR Mining”) reports consolidated financial results for the fourth quarter and year ended December 31, 2018.
Paul Benson, President and CEO said, “SSR Mining had another successful year in 2018 as we continued our track record of achieving production and cost guidance for the seventh consecutive year while transitioning to commercial production at Chinchillas. We maintained a strong balance sheet after a year of investment that brought a new mine into production, delivered reserve growth and included our strategic investment in SilverCrest Metals.
Looking ahead, 2019 consolidated gold production is forecast to grow to nearly 400,000 gold equivalent ounces as all three operations increase output, including our newest mine, Chinchillas, which is ramping up to steady-state operations. And by 2021, our production profile is expected to grow to 440,000 gold equivalent ounces, not including the potential upside at Marigold or success from our brownfield exploration programs. With nearly $420 million of cash and an outlook of increasing production and higher margins, we are well positioned to continue our track record of creating value for shareholders."
Fourth Quarter and Year-End 2018 Highlights:
(All figures are in U.S. dollars unless otherwise noted)
- Achieved annual production and cost guidance: Achieved initial guidance for the seventh consecutive year by delivering gold equivalent production of over 345,000 ounces at cash costs of $736 per payable gold equivalent ounce sold.
- Continued our track record of Mineral Reserves growth: Successful exploration activities in 2018 increased gold Mineral Reserves at the Marigold mine to 3.3 million ounces and at the Seabee Gold Operation to 608,000 ounces.
- Delivered record annual gold production at Seabee: The operation achieved its fifth consecutive annual production record, producing 95,602 ounces of gold, exceeding the top end of our upwardly revised annual guidance. Annual cash costs were $505 per payable ounce of gold sold.
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- Strong operating performance at Marigold: Delivered quarterly gold production of 54,306 ounces, resulting in annual production of 205,161 ounces of gold. Reported annual cash costs of $723 per payable ounce of gold sold, at the lower end of our improved guidance.
- Delivered updated Marigold life of mine plan: Released updated plan on June 18, 2018, outlining a ten-year mine life, 30% growth in production through 2021, and robust economics.
- Declared commercial production at Chinchillas: The mine achieved commercial production on December 1, 2018, marking a major milestone as we reached sustainable ore delivery from the Chinchillas mine to the Pirquitas plant. In December 2018, the Pirquitas mill operated at 3,605 tpd, processing exclusively Chinchillas ore.
- Investment in high-grade Las Chispas project: In the fourth quarter we purchased 9.7% of the issued and outstanding common shares of SilverCrest Metals Inc. for $23 million. SilverCrest's Las Chispas project represents exposure to an exciting high-grade development project with exploration upside in a favourable mining jurisdiction and compelling near-term development catalysts.
- Balance sheet remains strong: Cash and marketable securities totaled $449 million at yearend 2018 after project development and investments for 2019 growth and beyond.
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Marigold Mine, U.S.
| Three months ended December September June 30, March 31, Operating data 31, 2018 30, 2018 2018 2018 | Total 2018 2017 |
| Total material mined (kt) 17,039 21,284 15,958 16,150 Waste removed (kt) 11,361 14,411 8,083 9,052 Total ore stacked (kt) 5,679 6,873 7,875 7,099 Strip ratio 2.0 2.1 1.0 1.3 Mining cost ($/t mined) 1.86 1.51 1.92 1.80 Gold stacked grade (g/t) 0.34 0.32 0.42 0.37 Processing cost ($/t processed) 1.27 1.12 0.86 0.93 Gold recovery (%) 72.9 72.3 74.4 73.6 General and admin cost ($/t processed) 0.51 0.50 0.41 0.42 Gold produced (oz) 54,306 58,459 49,436 42,960 Gold sold (oz) 50,550 59,612 46,644 42,078 Realized gold price ($/oz) (1) 1,227 1,207 1,304 1,331 Cash costs ($/oz) (1) 760 711 700 720 AISC ($/oz) (1) 995 965 981 954 Financial data ($000s) | 70,431 69,011 42,907 43,422 27,526 25,589 1.6 1.7 1.76 1.68 0.37 0.35 1.03 0.92 73.5 73.0 0.45 0.46 205,161 202,240 198,884 200,192 1,261 1,254 723 647 974 896 |
| Revenue 61,861 71,848 60,752 55,880 Income from mine operations 9,977 13,254 14,670 12,312 Capital expenditures (2) 8,328 25,461 14,481 4,665 Capitalized stripping 1,208 2,529 850 2,902 Exploration expenditures (3) 2,096 2,956 3,243 1,914 | 250,341 250,825 50,213 66,666 52,935 20,364 7,489 22,863 10,209 4,900 |
(1) We report the non-GAAP financial measures of realized gold price, cash costs and all-in sustaining costs ("AISC") per payable ounce of gold sold to manage and evaluate operating performance at the Marigold mine. See “Cautionary Note Regarding Non-GAAP Measures”.
(2) Includes expansion capital expenditure of $22 million for the twelve months ended December 31, 2018.
(3) Includes capitalized and expensed exploration expenditures.
Mine production
In 2018, the Marigold mine produced 205,161 ounces of gold, surpassing the upper end of our revised production guidance. This compares to 202,240 ounces of gold produced in 2017. For the full-year, gold sales were 198,884 ounces due to bullion inventory increasing in the fourth quarter relative to the previous quarter, which we expect to sell in the first quarter of 2019.
Material mined during the year totaled 70.4 million tonnes, a 2% increase as compared to 2017. The mine achieved record annual ore tonnes delivered to the leach pads with over 27.5 million tonnes stacked.
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During the fourth quarter of 2018, 17.0 million tonnes of material were mined, down 20% from the third quarter due to scheduled maintenance on the electric rope shovel and longer haul cycles. Construction delays deferred the new leach pad commissioning to the first quarter of 2019 and solution application commenced in January 2019.
Approximately 5.7 million tonnes of ore were delivered to the heap leach pads at a gold grade of 0.34 g/t during the fourth quarter. This compares to 6.9 million tonnes of ore delivered to the heap leach pads at a gold grade of 0.32 g/t in the third quarter. Gold grade mined in the fourth quarter was 6% higher than the third quarter due to mining deeper in the current phase of the Mackay pit. The strip ratio declined to 2.0:1 in the quarter, a 5% reduction compared to the previous quarter.
In the fourth quarter of 2018, the Marigold mine produced 54,306 ounces of gold, representing a 7% reduction as compared to the previous quarter.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include all costs of inventory, refining costs and royalties, of $760 per payable ounce of gold sold in the fourth quarter of 2018 were 7% higher than the previous quarter primarily due to planned lower grades mined in the second half of the year. Total mining costs of $1.86 per tonne in the fourth quarter of 2018 were 23% higher than in the previous quarter due to fewer tonnes mined. Processing and general and administrative unit costs were higher in the fourth quarter of 2018 than in the third quarter of 2018 due to lower tonnes mined and processed. Processing and general and administrative costs in the current quarter were comparable on an absolute basis to the preceding quarter while mining costs declined. Cash costs per payable ounce of gold sold in 2018 were $723, higher than the $647 per payable ounce of gold sold in 2017, mainly due to higher leach pad opening inventory unit costs in 2018 relative to 2017.
AISC in the fourth quarter of 2018 was $995 per payable ounce of gold sold compared to $965 in the third quarter due to increased capital spending mostly related to mobile equipment and construction of a new leach pad. AISC of $974 per payable ounce of gold sold in 2018 increased from $896 in 2017, primarily due to higher capital investments and exploration partially offset by lower capitalized stripping.
Mine sales
A total of 50,550 ounces of gold were sold at an average realized price of $1,227 per ounce during the fourth quarter of 2018, a decrease of 15% from the 59,612 ounces of gold sold at an average realized price of $1,207 per ounce during the third quarter of 2018. In 2018, gold sales decreased marginally and totaled 198,884 ounces, compared to 200,192 ounces in 2017.
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Exploration
Exploration at Marigold in 2018 successfully replaced mine depletion with growth in Mineral Reserves compared to the end of 2017. Mineral Reserves increased to 3.30 million gold ounces (201.5 million tonnes at an average gold grade of 0.47 g/t), while Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) totaled 5.56 million gold ounces (354.5 million tonnes at an average gold grade of 0.47 g/t).
Drilling activities during the fourth quarter of 2018 targeted infill drilling and upgrade of Mineral Resources at Red Dot and growth at various phases of the Mackay Pit, with work also targeting resource addition. This is consistent with our longer-term objective of completing the necessary infill and geotechnical drilling to complete pit designs and an economic evaluation over the entire Red Dot area by mid-year 2019. During the quarter, we completed 21,260 meters of drilling in 60 reverse circulation ("RC") holes at the Mackay pit and within the Red Dot area. RC drilling for the year totaled 93,276 meters in 259 RC holes.
Following our exploration news release of November 6, 2018, we have received results from an additional 33 RC drill holes that targeted Mineral Resource portions of the Red Dot deposit and its northern extensions. This contributed, in part, to success in achieving our objective of converting Mineral Resources to Mineral Reserves.
For 2019, we are planning 60,000 meters of drilling as our exploration focus returns to resource growth on the prospective Valmy, East Basalt, and North and South Red Dot areas.
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Seabee Gold Operation, Canada
| Three months ended Operating data December September June 30, March 31, 31, 2018 30, 2018 2018 2018 | Total 2018 2017 |
| Total ore milled (t) 86,447 88,273 84,010 93,269 Ore milled per day (t/day) 940 959 923 1,036 Gold mill feed grade (g/t) 10.20 9.52 7.95 8.95 Mining cost ($/t mined) 57 48 60 59 Processing cost ($/t processed) 26 26 27 21 Gold recovery (%) 97.6 97.1 97.3 97.4 General and admin cost ($/t processed) 63 47 62 53 Gold produced (oz) 20,473 27,831 23,582 23,716 Gold sold (oz) (1) 21,711 29,175 20,512 20,012 Realized gold price ($/oz) (2) 1,236 1,210 1,306 1,340 Cash costs ($/oz) (2) 502 447 616 481 AISC ($/oz) (2) 743 596 854 896 Financial data ($000s) | 351,999 330,415 964 905 9.16 8.25 56 68 25 23 97.4 97.4 56 54 95,602 83,998 91,410 86,087 1,267 1,259 505 602 755 843 |
| Revenue 26,890 35,270 26,706 26,789 Income from mine operations 7,347 11,061 5,703 6,672 Capital expenditures 625 968 1,035 4,426 Capitalized development 2,910 1,812 2,069 2,283 Exploration expenditures (3) 1,661 2,860 2,745 2,032 | 115,655 108,334 30,783 15,644 7,054 7,190 9,074 8,294 9,298 5,959 |
(1) Beginning with the first quarter of 2018, the holder of the 3% net smelter return royalty elected to receive its royalty in-kind and we will no longer report these ounces within gold sold.
(2) We report the non-GAAP financial measures of realized gold price, cash costs and AISC per payable ounce of gold sold to manage and evaluate operating performance at the Seabee Gold Operation. See “Cautionary Note Regarding Non-GAAP Measures”.
(3) Includes capitalized and expensed exploration expenditures.
Mine production
The Seabee Gold Operation produced 95,602 ounces of gold in 2018, an annual production record resulting from an improved milling rate and higher gold grade.
In 2018, the operation milled 351,999 tonnes of ore, 7% higher than 2017 and another operating record, largely due to our ongoing Operational Excellence initiatives. During the year, average gold mill feed grade was 9.16 g/t, 11% higher compared to the average gold grade milled in 2017. The Santoy mine supplied 93% of ore milled, predominantly from long hole stopes; the remaining ore was sourced from the Seabee mine, which was closed in the second quarter of 2018.
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In the fourth quarter of 2018, the operation produced 20,473 ounces of gold, a 26% decrease primarily due to gold ounces contained in-circuit at year-end 2018 due to timing of gold pours.
During the fourth quarter, 86,447 tonnes of ore were milled at an average gold grade of 10.20 g/t and recovery of 97.6%. This compares to 88,273 tonnes of ore milled at an average gold grade of 9.52 g/t and recovery of 97.1% in the third quarter of 2018.
Mine operating costs
Cash costs and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs per payable ounce of gold sold, which include all costs of inventory, and refining costs were $502 in the fourth quarter of 2018, higher than the $447 recorded in the third quarter of 2018. Higher cash costs were due to higher unit mining and general and administrative costs and lower production. Costs per tonne mined were $57 in the fourth quarter of 2018, 19% higher than in the previous quarter due to lower tonnes mined. Processing costs per tonne remained comparable to the prior quarter, while general and administrative unit costs increased by 34% in the fourth quarter of 2018 compared to the third quarter of 2018, due to adjustments to payroll accruals between the two quarters and lower tonnes milled. Cash costs per payable ounce of gold sold in 2018 were $505, lower than the $602 per payable ounce sold in 2017 due to lower unit mining costs and higher gold mill feed grade.
AISC per payable ounce of gold sold were $743 in the fourth quarter of 2018, compared to $596 in the third quarter, due to higher cash costs and higher per ounce underground capital development in conjunction with lower ounces sold. In 2018, AISC per payable ounce of gold sold decreased to $755 from $843 in 2017, mainly due to lower cash costs per payable ounce of gold sold.
Mine sales
A total of 21,711 ounces of gold were sold at an average realized price of $1,236 per ounce of gold during the fourth quarter of 2018. This compares to 29,175 ounces of gold sold in the third quarter of 2018 at an average realized price of $1,210 per ounce of gold. Gold sales totaled 91,410 ounces in 2018 compared to 86,087 ounces in 2017. Realized prices were marginally higher in 2018 than in 2017.
Exploration
At the Seabee Gold Operation, our 2018 objectives were to maximize Mineral Resource to Mineral Reserve conversion on the Santoy 8, and Santoy Gap zones. We were successful with those objectives, as 2018 Mineral Reserves increased 39% after depletion to 608,000 gold ounces (Proven Mineral Reserves were 94,500 ounces (0.33 million tonnes at an average gold grade of
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9.00 g/t) and Probable Mineral Reserves were 513,500 ounces (1.73 million tonnes at an average gold grade of 9.24 g/t)). Measured and Indicated Mineral Resources (inclusive of Mineral Reserves) at 2018 year-end are 26% higher at 856,000 gold ounces (Measured Mineral Resources were 170,000 ounces (0.45 million tonnes at an average gold grade of 11.7 g/t) and Indicated Mineral Resources were 686,000 ounces (1.85 million tonnes at an average gold grade of 11.56 g/t)). Inferred Mineral Resources for 2018 are 482,000 gold ounces (1.70 million tonnes at an average gold grade of 8.82 g/t), reflecting our focus on conversion activities during the year.
During the fourth quarter of 2018, Seabee Gold Operation completed 15,453 meters of underground drilling for a total of 52,500 meters for the year to infill the Santoy 8A and Santoy Gap deposits. From surface, in the immediate vicinity of the Santoy mine, we completed 6,168 meters of drilling in the fourth quarter for a total of 24,389 meters of drilling for the year exploring at the Santoy Gap targets. Discovery and exploration of the Santoy Gap hanging wall ("HW") resulted in an initial Inferred Mineral Resource being reported in this mineralized structure sitting adjacent to the Santoy main ore zones. Greenfields drilling during the fourth quarter of 2018 totaled 3,552 meters with activities on the adjacent Fisher property, currently under option from Taiga Gold Corp.
For 2019, we are planning to drill 68,000 meters in the area of the Santoy mine, with another 16,000 meters of drilling on greenfields targets on property owned or optioned by us.
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Puna Operations, Argentina (75% interest)
(amounts presented on a 100% basis)
Three months ended Total
| December September June 30, March 31, Operating data 31, 2018 30, 2018 2018 2018 | 2018 2017 |
| Total material mined (kt) (1) 897 — — — Waste removed (kt) (1) 696 — — — Strip ratio (1) 3.5 — — — Mining cost ($/t mined) (1) 2.61 — — — Ore milled (kt) 342 308 396 374 Silver mill feed grade (g/t) 133 96 110 115 Zinc mill feed grade (%) 1.14 1.25 0.71 — Lead mill feed grade (%) (1) 0.92 — — — Processing cost ($/t milled) 22.18 20.87 17.26 15.34 Silver recovery (%) 81.5 69.9 68.1 67.7 Zinc recovery (%) 49.5 38.1 31.5 — Lead recovery (%) (1) 83.1 — — — General and admin cost ($/t milled) 8.16 7.98 7.07 6.33 Silver produced ('000 oz) 1,189 666 954 938 Silver sold ('000 oz) 932 623 1,142 1,064 Zinc produced ('000 lb) (2) 4,014 3,241 1,520 — Zinc sold ('000 lb) (2) 1,983 382 — — Lead produced ('000 lb) (3) 2,735 372 — — Lead sold ('000 lb) (3) 1,059 — — — Realized silver price ($/oz) (4) 14.42 15.45 16.49 16.79 Cash costs ($/oz) (4, 5) 15.02 17.41 14.73 17.07 AISC ($/oz) (4, 5) 20.45 22.39 17.66 18.37 Financial Data ($000s) | 897 — 696 — 3.5 — 2.61 — 1,420 1,798 114 152 0.84 — 0.92 — 18.72 13.00 72.1 70.3 39.3 — 83.1 — 7.34 5.19 3,747 6,177 3,761 5,994 8,775 — 2,365 — 3,107 — 1,059 — 15.92 17.10 15.91 13.07 19.33 14.30 |
| Revenue 14,961 7,915 16,570 15,233 Income from mine operations (788) (2,440 ) 830 (1,753) Capital expenditures 3,849 2,390 2,652 789 Deferred stripping — — — — Exploration expenditures (6) 21 6 429 6 | 54,679 89,614 (4,151) 30,953 9,680 4,604 — — 462 — |
(1) Data is for the period subsequent to December 1, 2018, the date upon which commercial production was declared at the Chinchillas mine.
(2) Data for zinc production and sales relate only to zinc in zinc concentrate.
(3) Data for lead production and sales relate only to lead in lead concentrate.
(4) We report the non-GAAP financial measures of realized metal prices, cash costs and AISC per payable ounce of precious metal sold to manage and evaluate operating performance at Puna Operations. See “Cautionary Note Regarding Non-GAAP Measures”.
(5) Cash costs and AISC per payable ounce of silver sold include stockpile inventory costs previously incurred of $5.30 for the three months ended December 31, 2017 (September 31, 2017 - $5.20, June 30, 2017 - $3.30, March 31, 2017 - $2.00) and $3.90 for the year ended December 31, 2017.
(6) Includes capitalized and expensed exploration expenditures.
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Mine production
In 2018, Puna Operations, of which we hold 75% interest, produced a total of 3.7 million ounces of silver, 8.8 million pounds of zinc and 3.1 million pounds of lead. On an attributable basis, silver production in 2018 totaled 2.8 million ounces.
During the year, ore was milled at an average of 3,890 tonnes per day. Ore milled contained an average silver grade of 114 g/t. The average silver recovery was 72.1%, a 3% improvement as compared to 2017.
In the fourth quarter of 2018, silver production was 1.2 million ounces, an increase of 79% relative to the third quarter, due mainly to the increased tonnage of higher-grade Chinchillas ore milled. On an attributable basis, silver production for the quarter totaled 0.9 million ounces.
Subsequent to the declaration of commercial production at Chinchillas, material mined in December 2018 totaled 897,000 tonnes, including 201,000 tonnes of ore.
During the fourth quarter of 2018, ore was milled at an average of 3,720 tonnes per day. In December ore was sourced exclusively from Chinchillas and achieved a 3,605 tonnes per day milling rate. Processed ore in the fourth quarter contained an average silver grade of 133 g/t, a 38% increase as compared to the third quarter of 2018, due to processing of high grade Chinchillas ore in December. The average silver recovery in the fourth quarter was 81.5%, a 17% increase over the third quarter.
Mine operating costs
Cash costs and AISC per payable ounce of silver sold are non-GAAP financial measures. Please see “Cautionary Note Regarding Non-GAAP Measures”.
Cash costs, which include cost of inventory, treatment and refining costs, provincial royalties, export duties and by-product credits, were $15.02 per payable ounce of silver sold in the fourth quarter of 2018, a decrease from $17.41 per payable ounce of silver sold in the third quarter of 2018. Such decrease was primarily due to higher production resulting from higher silver grade of ore processed and recognition of by-product credits.
Cash costs per payable ounce of silver sold in 2018 increased to $15.91 from $13.07 in 2017. Until commercial production was declared at Chinchillas on December 1, 2018, Puna Operations processed sequentially lower grade stockpile ore since the closure of the Pirquitas open pit in January 2017.
AISC per payable ounce of silver sold in the fourth quarter of 2018 were at $20.45 compared to $22.39 in the third quarter due to lower cash costs and higher volumes sold. AISC of $19.33 per payable ounce of silver sold in 2018 were higher than $14.30 per payable ounce of silver sold in 2017 due to higher cash costs and higher capital investments per ounce sold.
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Mine sales
Silver sales totaled 0.9 million ounces and attributable sales were 0.7 million in the fourth quarter of 2018, a 49% increase from the third quarter of 2018, due to higher production in the fourth quarter of 2018. Silver sales for the year totaled 3.8 million ounces and attributable share of silver sales in 2018 was 2.8 million ounces. This compares to 6.0 million ounces of silver sold in 2017.
Exploration
At Puna Operations, exploration activities were limited to the collection of detailed drone magnetic data at Chinchillas and the Pirquitas mine areas.
In 2018, we evaluated the potential for an underground mine at the Pirquitas deposit to provide supplemental ore to the Pirquitas mill. The study confirmed a technically feasible and economic project, however with a return below our investment thresholds at current metal prices. We have budgeted $1 million in 2019 for a 3,000-meter drill program to test for extensions to the mineralization that could have a positive impact on the project economics.
Chinchillas Project, Argentina
During the fourth quarter, pre-stripping activities at the Chinchillas project were completed, ore haulage met required tonnages and commercial production was declared on December 1, 2018. Ore feed to the Pirquitas plant has been sourced from the Chinchillas mine since that date. Metallurgical recovery performance of the Chinchillas ore has met or exceeded design.
Construction of the in-pit tailings pumping and delivery system is complete, the slurry pumps have been pre-commissioned, and the tailings pipeline hydraulic test finished. The water reclaim pipeline has been hydrostatically tested and the pumps installed in the barges. The power line to the pumps is finished and in service. Pre-commissioning and commissioning of the tailings system is in process.
The Chinchillas truck shop structure is nearing completion with the installation of the main structural steel, cladding and internal offices. Electrical installation continues and the bridge crane is scheduled for installation in February. Two truck bays are being temporarily used in operations, while the finishing equipping of the facility is in progress.
Certain infrastructure and remaining road upgrades within the scope of the project will continue into the first quarter of 2019 with remaining capital expenditures totaling $9 million. The project remains on budget.
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Other Projects
Pitarrilla Project, Mexico
In 2018, we advanced a study evaluating the potential for an underground mine at the Pitarrilla project. The study confirmed a technically feasible and economic project; however, with a return below our investment thresholds at current metal prices. We are conducting a review of the geological model evaluating structural controls that may define higher grade areas that were potentially underestimated in the model originally developed for open pit purposes.
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